Oil & Gas Glossary

To temporarily or permanently cease production from a well or to cease further drilling operations.

American Petroleum Institute (API):

A petroleum industry association that sets standards for oil field equipment and operations.

Artificial lift:

Any method used to raise oil to the surface after a well ceases to flow.

Assignment:

The legal instrument whereby Oil and Gas Leases are assigned/conveyed.

Assignee:

The person to whom Oil and Gas Leases are assigned.

Assignor:

Person who conveys the Oil and Gas Leases in an Assignment.

Authorization For Expenditure (AFE):

An estimate of the costs of drilling and completing a proposed well, which the operator provides to each working interest owner before the well is commenced.

Behind Pipe:

If a well drills through several pay zones and is completed in the deepest productive reservoir, casing is set all the way down to the producing zone. Viewed from (a perspective) inside the borehole, reserves in the shallower pay zones up the hole are behind the casing pipe.

Blowout:

An uncontrolled flow of gas, oil, or other well fluids from the well.

Borehole:

The hole created by the drilling of a well.

Bottomhole:

The lowest or deepest part of a well.

Brine:

Water that has a quantity of salt, especially sodium chloride, dissolved in it; salt water.

BTU:

A unit of heat energy, used to describe the amount of heat that can be generated by burning oil or gas.

Casing:

Steel pipe placed in an oil or gas well to prevent the wall of the hole from caving in, to prevent movement of fluids from one formation to another and to aid in well control.

Cementing:

The application of a liquid slurry of cement and water to various points inside or outside the casing.

Check Stub:

Stub attached to a check disclosing well name, month of production, price received, total volumes produced, and JIB expenses deducted.

CNG:

Compressed Natural Gas.

Completion:

After the drilling of a successful well, the “completion” includes all the work required to make the well ready for commercial production.

Conveyance:

Legal term for transferring the title of a property from one party to another, typically by deed (or bill of sale, etc.).

Crude Oil:

A naturally occurring mixture of liquid hydrocarbons as it comes out of the ground (before or after any dissolved gas has been separated from it, but prior to any process of distilling or refining). Greenish crude is usually high in paraffin (wax) content; blackish oil is more likely to be asphaltic. Different types of source rock generate different types of crude oils.

Daily Drilling Report:

A record made each day of the operations on a working drilling rig and, traditionally, phoned, faxed, emailed, or radioed in to the office of the drilling company and possibly the operator every morning.

Dampener:

An air or inert gas device that minimizes pressure surges in the output line of a mud pump. Sometimes called a surge dampener.

Deed:

A written legal document by which the title to a property is transferred from one party to another.

Depletion:

The value of a naturally occurring mineral deposit is a function of (1) the market value of the mineral, and (2) the concentration of the mineral in the mineral deposit.

Depreciation Allowance:

Income tax deduction allowed for the exhaustion of a natural resource.

Division Order:

A schedule of owners and their decimal share in revenues of the well derived from the sale of oil or gas.

DOE:

U.S. Department of Energy.

Engine:

A machine for converting the heat content of fuel into rotary motion that can be used to power other machines.

Erosion:

The process by which material (such as rock or soil) is worn away or removed (as by wind or water).

EUR:

Expected Ultimate Reserves. An estimate of the cumulative volume of reserves that will ultimately be recovered over the life of a well, field, or property.

Farmount Agreement:

An arrangement (technically, a tax partnership) in which the responsibility for exploration and development for a specific work program is shifted (by assignment) from the working interest owner to another party.

Fastline:

The end of the drilling line that is affixed to the drum or reel of the drawworks, so called because it travels with greater velocity than any other portion of the line.

Flow:

A current or stream of fluid or gas.

Fracturing:

A procedure undertaken to attempt to increase the flow of oil or gas from a well. A fluid (usually crude oil, diesel oil, or water) is pumped into the reservoir, with such great force that the reservoir rock is physically broken and split open.

Futures Prices:

Refers to the New York Mercantile Exchange (NYMEX) which introduced futures contracts for crude oil in 1985 and natural gas in 1990. A futures contract is an obligation to buy or sell a specified quantity at a specified price in some future month within the next 18 months.

Gasket:

Any material (such as paper, cork, asbestos, stainless steel or other types of metal, or rubber) used to seal two essentially stationary surfaces.

Grantor:

A person who grants or conveys lands, minerals, etc.

Grantee:

The person receiving the grant of lands, minerals, etc.

Hang rods:

To suspend sucker rods in a derrick or mast on rod hangers rather than to place them horizontally on a rack.

Hard hat:

A hard helmet worn by oilfield workers to minimize the danger of being injured by falling objects.

Horizontal Drilling:

The newer and developing technology that makes it possible to drill a well from the surface, vertically down to a certain level, and then to turn at a right angle, and continue drilling horizontally within a specified reservoir, or an interval of a reservoir.

Impeller:

A set of mounted blades used to impart motion to a fluid air or gas (such as, the rotor of a centrifugal pump).

Intangible Drilling Costs (IDC):

Expenditures, deductible for federal income tax purposes, incurred by an operator for labor, fuel, repairs, hauling, and supplies used in drilling and completing a well for production.

Jar:

A percussion tool operated manually or hydraulically to deliver a heavy upward or downward blow to fish stuck in the borehole.
Verb: to apply a heavy blow to the drill stem by use of a jar or bumper sub.

Joint Interest Billing (JIB):

Statement attached to a check disclosing well names, month of expenses, total expenses, and venturers shares.

Joint Operating Agreement:

Statement attached to a check disclosing well names, month of expenses, total expenses, and venturers shares.

Kelly:

The heavy square or hexagonal steel member suspended from the swivel through the rotary table and connected to the topmost joint of drill pipe to turn the drill stem as the rotary table turns.

Landman:

The person who secures leases and handles damages for oil and gas companies who are drilling new wells or laying pipelines.

Landman:

The person who generally owns all or part of the minerals under his lands and is entitled to lease the same.

Lease (Oil and Gas):

A contract by which the owner of the mineral rights to a property conveys to another party, the exclusive right to explore for and develop minerals on the property, during a specified period of time.

Lessee:

The person who purchases an Oil, Gas, and Mineral Lease.

Lessor

The party who grants an Oil, Gas, and Mineral Lease.

Management Fee:

A fee paid by the limited partners to the general partner for services he provides in the management of the partnership.

Mandrel:

A cylindrical bar, spindle, or shaft around which other parts are arranged or attached or that fits inside a cylinder or tube.

Mast:

A portable derrick that is capable of being raised as a unit, as distinguished from a standard derrick, which cannot be raised to a working position as a unit. For transporting by land, the mast can be divided into two or more sections to avoid excessive length extending from truck beds on the highway.

Methane Gas:

The simplest of the hydrocarbons, CH4. It is a colorless, odorless gas which generates about 1,012 Btu of heat energy per 1,000 cubic feet of gas (MCF), when burned.

Mineral Owner:

Generally one who grants an Oil, Gas, and Mineral Lease.

Natural Gas:

A mixture of hydrocarbon compounds and small amounts of various non-hydrocarbons (such as carbon dioxide, helium, hydrogen sulfide, and nitrogen) existing in the gaseous phase or in solution with crude oil in natural underground reservoirs.

Natural Gas Reserves:

Gas deposits that are estimated by scientists to be economically recoverable given current drilling technology and gas prices.

Natural Gas Resources:

Untapped, underground gas deposits.

Net Revenue Interest:

An owner’s interest in the revenues of a well.

Oil, Gas, Mineral Lease:

The agreement outlining the basic terms of developing lands or minerals such as royalty to be paid, length of time, and description of lands.

Oil Gravity:

The density of liquid hydrocarbons, generally measured in degrees.

Operating Expenses:

The costs of operating a well.

Operating Interest:

A working interest owner who is also the well operator.

Operator:

The party designated in the Operating Agreement to conduct the operations on the well.

Overriding Royalty (ORRI):

A revenue interest in oil and gas, created out of a working interest. Like the lessor’s royalty, it entitles the owner to a share of the proceeds from gross production, free of any operating or production costs.

Packer:

A piece of downhole equipment that consists of a sealing device, a holding or setting device, and an inside passage for fluids.

Primary Term:

The initial period in an Oil and Gas and Mineral Lease to develop the property.

Permeability:

A measure of the ease with which a fluid such as water or oil moves through a rock when the pores are connected. Geologists express permeability in a unit named the darcy, but oilmen use the millidarcy because most of the rocks they come in contact with are not very permeable.

Porosity:

A measure of the number and size of the spaces between each particle in a rock. Porosity affects the amount of liquid and gases, such as natural gas and crude oil, that a given reservoir can contain.

Private Placement Memorandum (PPM):

This refers to any type of offering of securities to any number of private accredited investors. It lays out all the details of an investment opportunity for the prospective client.

Reserves:

The amount of oil or gas in a reservoir currently available for production, usually described as barrels of oil, or MCF.

Royalty Interest:

Funds received from the production of oil, free of costs, except taxes.

Safety clamp:

A clamp placed tightly around a drill collar that is suspended in the rotary table by drill collar slips.

Salt Water Disposal Well:

A well into which oilfield salt water is disposed.

Severance Tax:

A tax due the state on oil or gas produced or “severed” from the earth.

Shut-In:

An oil or gas well which is inactive.

Spacing Unit:

The size (amount of surface area) of a parcel of land on which only one producing well is permitted to be drilled to a specific reservoir.

Spot Market:

A short-term contract (typically 30 days) for the sale or purchase of a specified quantity of oil or gas at a specified price.

Surface Owner:

A landowner who owns no minerals under his land.

Surface Rights:

Surface ownership of a tract of land from which the mineral rights have been severed.

Tally:

To measure and record the total length of pipe, casing, or tubing that is to be run in a well.

Tag line:

In crane and truck operations, a rope attached to the bottom of a load suspended by the crane or truck, which, when grasped by a crew member, allows the crew member to prevent rotation and to assist in guiding the load.

Tar Sands:

Rocks (other than coal or oil shale) that contain highly viscous hydrocarbons that are unrecoverable by primary production methods.

Viscosity:

A fluid’s resistance to flowing.

West Texas Intermediate (WTI):

Refers to a grade of crude oil produced in the Permian and Midland basin areas of west Texas. The price paid for crude oil varies according to quality.

Working Interest:

Interest in a well which bears the cost of operations.

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